3. RESULTS
3.2 Reliability and Robustness
Cronbach’s alpha is a prominent method to measure reliability an important character of alpha is, alpha value tends to increase with increase the items in the scale. So, this thesis we used Cronbach’s alpha to test the internal consistency and reliability. Other literature shows that the value 0.6 is sufficient threshold value to pass the reliability test. Cronbach’s alpha differs from 0 to 1, value from less than 0.6 is unsatisfactory internal consistency and reliability but greater than 0.6 it is satisfactory. So, this thesis using the 0.6 minimum threshold criteria for significant reliability.
Table 2 Reliability Test Country Oriented Factors
Variables
Rich and strong purchasing power of economy
0.759 0.732
Inflation 0.809 0.677
Size of Economy 0.790 0.647
Growth rate of economy 0.789 0.635
GDP per capita of economy 0.810 0.571
Infrastructure 0.739 4
Adequacy of utilities. ex- electricity, water, sanitation
0.683 0.560
16 Adequacy of telecommunication and IT services
0.636 0.525
Adequacy of developed transport 0.722 0.603 Adequacy of overall infrastructure 0.665 0.459
Political Factors 0.747 4
Government tendency to promote India as an investment destination
0.740 0.510
Political trust between India and the parent firm’s country
0.655 0.732
Adequacy of investment friendly policy 0.555 0.751
Policy Stability/Instability 0.778 0.358
Proximity with neighbour country 0.811 3
Location benefits with neighbor country 0.812 0.587 Adequacy to access to the neighbour country
market
0.569 0.811
The geographic proximity between India and the parent firm’s country
0.800 0.603
Social Factors 0.755 3
Employees loyalty to the company 0.467 0.744 0.755 3
Adequacy of ethical employees 0.681 0.587
Ethical business environment 0.772 0.541
Institutional administration 0.821 3
Bureaucratic institution. ex FIPB, RBI, CVC 0.594 0.818 Regulatory framework boundation 0.568 0.842
National judiciary system 0.973 0.419
Market Factors 0.634 4
Size of local market 0.652 0.270
Future Growth and development of parent firms in the host country
0.476 0.523
Increase the product line 0.576 0.403
Accessible market information 0.523 0.487
Global Competition Factors 0.775 3
Follow the other competitors 0.572 0.716
17
Follow firms in complementary sector 0.769 0.541 Explore any other opportunities due to
globalization
0.728 0.582
Finance 0.693 2
Access to finance facility . 0.531
Current currency exchange rate . 0.531
Source: compiled by the author.
The table-2 showing the reliability test for country-oriented factors. The second row represent Cronbach's Alpha if Item deleted, we can see all value in column second is near to Cronbach's Alpha value. Therefore, all variables are contributing the to experiment effectively. The last determinant finance didn’t show any value because it contains only two variables. The second column shows the correlation between the variables for a particular determinant for instance economic determinant, GDP per capita has minimum correlation value 0.571, same as we can see other variables. Therefore, we can consider that all variables for country-oriented factors are pass the reliability test.
Table 3 Reliability Test States Oriented Factors
Variables
Corrected Item-Total Correlation
Cronbach's Alpha if Item
Deleted
Cronbach's Alpha
N of Items
State Infrastructure 0.732 4
Basic infrastructure, electricity, water and gas
supply 0.238 0.814
Transport linkage 0.687 0.569
Information and communication technology
and IT services 0.689 0.573
Overall infrastructure development in the state 0.522 0.673 Corruption
Crime and theft records 0.51 0.769 0.782 4
Political corruption in state 0.688 0.679
18 State Judiciary and municipal system fair and
impartial 0.726 0.65
Industry agglomeration 0.459 0.788
Intra Industry agglomeration
Proximity to raw material suppliers 0.219 0.8 0.716 4
Proximity benefit of the same sector 0.668 0.547 Proximity to Industrial park and export
processing zone 0.682 0.542
Proximity to customers and buyers 0.489 0.664
State Investment Incentives 0.71 3
Ease of industrial laws 0.47 0.694
Environment permission 0.562 0.579
Financial incentives and rebates 0.556 0.586
State Institutional Administration .615 3
State judicial system
.477 .439
Tax administration regulatory framework .617 .271 Overall state Institutional system partial and
fair (ex. Combination of Municipal and local police etc.)
.241 .806
source: compiled by the author.
Table 3 presenting the reliability test for states-oriented factors there is five-determinant related to the state-oriented FDI location choice. From table-3 all variables within the determinant positively correlated with each other.
Proximity to raw material and suppliers have the lowest correlation value 0.219. This variable has alpha value 0.8 which is higley contributing determinant. State institutional administration has the lowest Cronbach's Alpha value 0.615 but overall it passes the threshold level 0.6 criteria. We can consider all variables related to state pass the robustness test.
19 Table 4 Reliability test city-oriented factor
Variables Corrected
City Infrastructure 0.604 6
Parking facility .295 .576
Availability of telecommunication IT services
.342 .560
Adequate availability of utilities (water, electricity, gas, etc.)
.396 .536
Accessibility via highways .174 .622
Proximity to the city airport .627 .400
Availability of nearest transport .211 .609
Regional Agglomeration 0.790 4
Proximity to customers and employee
0.326 0.851
Proximity with informal sector 0.727 0.669 Clustering of other firms within the
city
0.744 0.659
proximity with an organized developed industrial zone
0.624 0.726
Cost Factors 0.769 4
Cost of land, construction and renovation.
0.718 0.634
Rent cost 0.598 0.699
Availability of low-cost labour 0.745 0.62
Logistic cost within the city 0.286 0.863
Regional Competitiveness 0.726 3
Regional economic environment 0.627 0.54
Innovation and technology spillover in the city. ex-Silicon Valley
0.574 0.605
Labor market efficiency 0.45 0.748
Regional Finance Facility 0.785 2
20 Availability of credit from a
regional bank
0.643
Availability of Insurance 0.643 Source: compiled by the author.
From table 4 infrastructure has the lowest alpha value 0.604 but greater than our threshold level. Regional agglomeration has the highest alpha 0.790 in city-oriented factors. So, all city-city-oriented variables pass the reliability test.
Overall for summarizing the reliability test for the national, sub-national and regional level. The variable at the national level has nine determinant and 31 independent variables which represent the national level FDI location choices criteria, the sub-national level has five determinant and 18 variables which reflect the Karnataka’s foreign investment location related variables and for Bangalore first column shows five determinants with nineteen variables for city-level FDI location choice. From the column, corrected item, total correlation and Cronbach's Alpha item if deleted we can say that all variables in the research are contributed effectively, there is no need to omit any variables. The fourth column representing the Cronbach's Alpha, threshold criteria for considering the reliable determinant. From table 2,3 and 4 we can see that all determinants have the Cronbach’s alpha value greater than 0.6 which we want in this research. Therefore, all determinants passed the reliability test and we can perform the goodness of fit test.